Avoiding Stagflation

 The Federal Reserve and European Central Bank should stand firm and raise rates this week.

Could stagflation — the toxic combination of stagnant output and persistently high inflation last experienced in the 1970s and 1980s — really be making a comeback?

It’s possible. 

A further rise of 25 basis points in the policy rate, to 5.25%, is called for — and Fed Chair Jerome Powell should be careful not to promise that it will be the last. That should depend on further progress toward lower inflation.

At the ECB, the dilemma for President Christine Lagarde and her colleagues is similar, if more acute.  Core inflation stands at 5.6% — and in France and Spain, it’s rising again. The ECB’s current policy rate is just 3%, still substantially negative in real terms. 

The Editors Bloomberg 3 maj 2023

https://www.bloomberg.com/opinion/articles/2023-05-03/avoiding-stagflation-will-take-bravery-from-the-fed-and-ecb



FOMC: Banks Will Give the Fed Something Else to Discuss - Bloomberg





ECB:s egna prognoser visar att inflationen kommer att falla till under 3 procent under det sista kvartalet 2023 
men att det dröjer till andra halvan av 2025 innan inflationstakten är tillbaka på bankens målsättning om 2 procent.

DI 9 maj 2023




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